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Smith v. Iron Workers District Council of Southern Ohio & Vicinity Pension Trust

United States District Court, N.D. Indiana, Fort Wayne Division

June 28, 2018




         On August 3, 2017, Plaintiff Deborah Smith filed a state court Complaint [ECF No. 5] against Defendants Iron Workers District Council of Southern Ohio & Vicinity Pension Trust (the Fund) and Garland Smith. This case was removed to federal court [ECF No. 1] on August 25, 2017. On August 31, 2017, the Fund filed a Motion for Judgment on the Administrative Record [ECF No. 7], to which the Plaintiff responded on April 30, 2018 [ECF No. 44], and the Fund replied on May 11, 2018 [ECF No. 46]. The Plaintiff filed an Amended Complaint with leave of Court on March 27, 2018 [ECF No. 37], which clarified that she was asserting both a claim under the Employee Retirement Income Security Act of 1974, as amended (ERISA), 29 U.S.C. § 1002(2)(A) as well as a state law claim for conversion. The Fund filed a Motion to Dismiss [ECF No. 42] the Plaintiff's state law conversion claim on the grounds that the claim was preempted. The Plaintiff responded on April 24, 2018 [ECF No. 43], and the Fund replied on May 1, 2018 [ECF No. 45]. Subsequently, the Fund filed a Motion to Transfer Case [ECF No. 47] on June 6, 2018, arguing that the Southern District of Ohio is a more appropriate forum. The Plaintiff responded [ECF No. 48] on June 19, 2018, and the Fund replied [ECF No. 49] on June 26, 2018. These issues are now fully briefed and ripe for review.


         The Fund is an “employee pension benefit plan” within the meaning of ERISA § 2(2)(A) and a “multiemployer plan” within the meaning of ERISA § 2(37)(A). In January 2013, Garland Smith retired and elected to receive a single life annuity payment option (the Plan), terminating upon his death. At the time of his election, Smith and the Plaintiff were married. Smith's Plan provided that if Smith died prior to receiving sixty monthly payments, his named beneficiary would receive the balance of those payments, but would not be entitled to any further payments. However, if Smith died after sixty payments had been tendered, the named beneficiary would not receive any payments.

         Smith submitted an application for benefits pursuant to the Plan on January 18, 2013, and his benefits commenced on February 1, 2013. In January 2016, Smith and the Plaintiff divorced. On February 29, 2016, after dissolution of the marriage, the Fund received a proposed domestic relations order (DRO); however, the Fund found that the DRO was non-compliant with ERISA and the Fund's policies. By letter dated May 23, 2016, the Fund advised the Plaintiff and Smith that it would segregate the forty percent allotted to the Plaintiff for eighteen months or until it was presented with a qualified DRO. If the Plaintiff and Smith did not submit a qualified DRO within the eighteen months, the segregated amount would be paid to Smith.

         On May 18, 2016, the Plaintiff inquired whether a DRO that provided for continued payments to her beneficiaries if she predeceases Smith, even after the first sixty payments had been tendered, would be a qualified DRO. Notwithstanding this inquiry, on May 24, 2016, the Plaintiff submitted a DRO that did not include such a provision, which the Fund determined was a qualified DRO and issued a letter of compliance on June 1, 2016. On June 2, 2016, the Plaintiff again inquired as to whether a DRO that provided for continued payments to her beneficiaries even if she died after the first sixty payments would be a qualified DRO. The Fund responded by letter dated June 9, 2016, that “an order containing such a provision would fail to be a complying order under the Fund's procedure.” (A.R. 10052, ECF No. 7-1.) In November 2016, the Whitley Circuit Court issued the DRO at issue in this case [ECF No. 5 at 11-14], which the Plaintiff submitted on November 18, 2016. This DRO included the provision regarding the Plaintiff's beneficiaries despite the Fund's advisement that the DRO would be non-compliant. Specifically, the DRO provides that the Plaintiff is to receive forty percent of Smith's monthly payments and that if the Plaintiff predeceases Smith, her beneficiaries or her estate will continue to receive forty percent of the payments. (See DRO at 2-3.) However, if the Plaintiff dies after Smith, her interest in the Plan payments will cease at the end of the first sixty months, and no further payments would be tendered to her beneficiaries. (Id. at 3.) The Fund responded by letter dated December 5, 2016, that the modified DRO was not qualified because it conflicted with the terms of the Plan.

         Through counsel, the Plaintiff appealed the Fund's decision on January 31, 2017, including the Fund's decision to segregate the Plaintiff's forty-percent entitlement. The Fund responded on February 3, 2017, maintaining its position that the November 2016 DRO was unqualified, denying the Plaintiff's request for an “expedited appeal, ” and inquiring whether the Plaintiff would like her appeal heard at the upcoming Trustees' meeting on March 14, 2017. The Plaintiff did not respond prior to March 14, 2017, and her appeal therefore was not heard on that date. Instead, the Plaintiff's appeal was heard at the Trustees' meeting on May 11, 2017, and, after consideration, the Trustees, as Plan administrators, denied the Plaintiff's appeal. Along with a denial letter explaining their decision, the Trustees advised the Plaintiff of her right to file a lawsuit under § 502(a) of ERISA.

         On August 3, 2017, the Plaintiff filed her claim against the Fund requesting “equitable relief” in the form of damages as well as asserting a claim for conversion in violation of Indiana Administrative Code (IAC) § 34-24-3-1. With leave of Court, the Plaintiff amended her Complaint on March 27, 2018. In her Amended Complaint, the Plaintiff alleges violations of § 502(a)(1)(B) of ERISA and IAC § 34-24-3-1.

         In its Motion for Judgment on the Administrative Record, [1] the Fund argues that the Court must review the Trustees' decision under an “arbitrary and capricious” standard and therefore may review only the record that was before the Trustees. Thus, the Fund argues, because the Administrative Record has been made of record in this case, judgment is appropriate as to the Plaintiff's ERISA claim. The Fund also argues that the Court should dismiss the Plaintiff's conversion claim because it is preempted by ERISA.


         A. Motion to Transfer Case

         The Court turns first to the Fund's Motion to Transfer Case to the Southern District of Ohio on the basis of forum non conveniens. The Plaintiff may demonstrate proper venue under ERISA's venue provision, 29 U.S.C. § 1132(e)(2), or under the federal venue statute, 28 U.S.C. § 1391(b). See Varsic v. U.S. Dist. Court for Cent. Dist. of Cal., 607 F.2d 245, 248 (9th Cir.1979) (“The ERISA venue provision is intended to expand, rather than restrict, the range of permissible venue locations.”); 14D Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 3825 (4th ed.) (“The ERISA venue provision is not exclusive.”). Under ERISA, venue is proper in a district court of the United States: (1) “where the plan is administered, ” (2) “where the breach took place, ” or, (3) “where a defendant resides or may be found.” § 1132(e)(2). Under the federal venue statute, venue is proper in a district court of the United States: (1) “in which any defendant resides, if all defendants reside” in the same State, (2) “in which a substantial part of the events or omissions giving rise to the claim occurred, ” or if (1) or (2) do not apply, then (3) “any judicial district in which any defendant is subject to the court's personal jurisdiction with respect to such action.” § 1391(b). Venue can be proper in more than one district. See Armstrong v. LaSalle Bank Nat'l Ass'n, 552 F.3d 613, 617 (7th Cir. 2009).

         The venue in which “the breach took place” means “the place where pension benefits are received, which is plaintiff's residence . . . .” Macdonald v. Assoc. for Restorative Dentistry Ltd. Pension Plan, No. 2:16-cv-168, 2016 WL 4506872, at *2 (N.D. Ind. Aug. 29, 2016); see also Strickland v. Trion Grp., Inc., 463 F.Supp.2d 921, 925-26 (E.D. Wis. 2006); Cole v. Cent. States Se. & Sw. Areas Health & Welfare Fund, 225 F.Supp.2d 96, 98 (D. Mass. 2002); Wallace v. Am. Petrofina, Inc., 659 F.Supp. 829, 832 (E.D. Tex. 1987); Bostic v. Ohio River Co. (Ohio Div.) Basic Pension Plan, 517 F.Supp. 627, 636-37 (S.D. W.Va. 1981). In the present case, the Plaintiff resides in the Northern District of Indiana; as such, that is the district in which the Plaintiff expected to receive benefits. Thus, the Court concludes that the alleged breaches took place in the Northern District of Indiana. Accordingly, venue is proper in the Northern District of Indiana pursuant to the “breach” provision of 29 U.S.C. § 1132(e)(2).

         Title 28 of the United States Code, § 1404(a), provides that “[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented.” The movant bears the burden of showing that the transferee court is clearly more convenient. K & F Mfg. Co. v. W. Litho Plate & Supply Co., 831 F.Supp. 661, 664 (N.D. Ind. 1993). The decision to transfer a case pursuant to § 1404(a) ultimately lies within the transferor court's discretion. Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219 (7th Cir. 1986) (“The weighing of factors for and against transfer necessarily involves a large degree of subtlety and latitude, and therefore, is committed to the sound discretion of the trial judge.”).

         The Court balances the following interests in analyzing convenience: “(1) the plaintiff's choice of forum, (2) the situs of the material events, (3) the relative ease and access to sources of proof, (4) the convenience of the witnesses, and (5) the convenience of the parties of litigating in the respective forums.” Schumacher v. Principal Life Ins. Co., 665 F.Supp.2d 970, 977 (N.D. Ind. 2009). The analysis regarding the interests of justice focuses on the efficient administration of the court system. See Coffey, 796 F.2d at 219-20. A transfer should not be granted if it merely shifts convenience from one party to another. K & F Mfg. Co., 831 F.Supp. at 664. In this case, the Fund, as the party moving for transfer, “has the burden of establishing, by reference to particular circumstances, that the transferee forum is clearly more convenient.” Coffey, 796 F.2d at 220.

         The Fund argues that the Southern District of Ohio is a more appropriate venue to litigate this dispute because (1) Ohio was the situs of material events; (2) the sources of proof are located in Ohio; (3) Ohio is not inconvenient to the Plaintiff; and (4) Ohio is more convenient for potential witnesses. The Fund also argues that transfer would be in the interests of justice regardless of the convenience of the parties because the Southern District of Ohio statistically provides a speedier path to resolution of the dispute.

         First, the Court is not persuaded by the Fund's “interests of justice” argument. The Court is disposing of the Fund's dispositive Motions concurrently with its Motion to Transfer. At this point in the litigation, the Court is skeptical that this case could be resolved any more efficiently by transfer to another district.

         The Fund argues that the situs of the material events “weighs substantially and solely” in favor of transfer because at issue in this case is a decision that was made in Ohio. The Court is not persuaded by this argument. The Court has already determined that venue in this district is proper because the alleged breach of the Plan occurred in this district. At minimum, it can be said that material events related to the instant case occurred in both districts, and this factor therefore weighs neutrally in the Court's analysis. The Court is also not persuaded that the location of sources of proof militate in favor of transfer. In filing its Motion for Judgment on the Administrative Record, the Fund asserts that all of the evidence necessary to resolve the case is already before the Court. The location of the original documents and the witnesses to the creation of those documents are irrelevant to the Court's review of the record and determination of the merits of the case. Nor is the Court persuaded that any overall convenience to the parties or their witnesses will be served by transfer. As to the witnesses, neither party asserts that any witnesses are necessary to the resolution of this case. Moreover, the Fund acknowledges that the Northern District of Indiana is a more convenient venue for the Plaintiff. Other than the reasons cited above, which the Court does not find persuasive, the Fund does not offer any reasons that demonstrate that the convenience gained by the Fund by litigating in the Southern District of Ohio outweighs the convenience lost to the Plaintiff. “Where the parties each reside in different states, there is no choice of forum that will avoid imposing inconvenience on one or the other, and ‘the tie is awarded to the plaintiff.'” Bethany Lowe Designs Inc. v. ESC Trading Co., No. 10-4052, 2011 WL 134058, at *2 (C.D. Ill. Jan. 14, 2011) (quoting In re Nat'l Presto Indus., Inc., 347 F.3d 662, 665 (7th Cir. 2003)). Therefore, the Court does not find that the Southern District of Ohio is “clearly more convenient, ” and the Court will deny the Fund's Motion to Transfer.

         B. Motion for Judgment on the Administrative Record

         1. Procedure

         The Plaintiff's first argument regarding the Fund's Motion for Judgment on the Administrative Record is that it is procedurally improper because it is not a recognized motion under the Federal Rules of Civil Procedure. Rather, such a motion is a creature of the Rules of the United States Court of Federal Claims. The Plaintiff argues that the proper procedural vehicle would have been a motion for summary judgment, citing Evanston Community Consolidated School District Number 65 v. Michael M., 356 F.3d 798, 802 (7th Cir. 2004).[2] The Court previously determined that the Fund's Motion was not a motion for summary judgment. (See ECF No. 10.) Thus, the Plaintiff asserts, “[t]he Court would be well within its discretion to decline to rule on the Fund's motion and order the Fund to file a proper summary judgment motion in compliance with Federal Rule of Civil Procedure 56.” (Pl. Resp. to Def. Mot. for Judgment on the Admin. Record at 5, ECF No. 44.) However, the sua sponte determination that the Motion for Judgment was not a summary judgment motion was for the purposes of clarifying briefing deadlines and says nothing regarding the procedural effect of the Motion. And, as noted below, the Court is limited to the evidence that was before the Plan administrators, and the Plaintiff has not argued that there is any evidence to be introduced as to the substance of her § 502(a) claim that is not already part of the record. The Court sees no benefit in requiring the Fund to re-file the substance of its Motion in the form of a summary judgment motion.[3] The Plaintiff has produced no authority within the Seventh Circuit in which a court declined to review a motion for judgment on the administrative record on such a procedural technicality. To the contrary, courts in the Seventh Circuit consider such motions on their merits. See, e.g., Dorris v. Unum Life Ins. Co. of Am., No. 16-CV-508, 2018 WL 1993186 (S.D. Ill. Apr. 27, 2018); Gittings v. Tredegar Corp., 713 F.Supp.2d 746 (N.D. Ill. 2010); Hjortness ex rel. Hjortness v. Neenah Joint Sch. Dist., No. 05-C-648, 05-C-656, 2006 WL 1788983 (E.D. Wis. June 27, 2006). Nor is there any prejudice to the Plaintiff as she has fully responded to the merits of the Fund's argument. Thus, the Court will not elevate form over substance and require the Fund to file the same motion under a different caption, and it will proceed to consider the Fund's Motion on the merits.

         2. Standard of Review

         The parties dispute the applicable standard of review. The Fund argues that the Court should review the Trustees' decision under an “arbitrary and capricious” standard whereas the Plaintiff argues that the Trustees' decision is subject to a de novo review.

         “The standard of judicial review in civil actions under 29 U.S.C. § 1132(a)(1)(B) depends upon the discretion granted to the plan administrator in the plan documents.” Semien v. Life Ins. Co. of N.A., 436 F.3d 805, 810 (7th Cir. 2006) (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). “[A] denial of benefits challenged under § 1153(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” Firestone Tire & Rubber, 489 U.S. at 115. Where the plan administrator has such discretionary authority, a court must review the decision under an “arbitrary and capricious” standard.

         The Plaintiff argues that the primary issue in the case is not the interpretation of the pension plan but rather is whether the DRO is qualified-a matter of statutory interpretation. Thus, the Plaintiff argues, “[r]egardless of whether the Plan contains the discretionary language, the Court reviews de novo questions of law” such as “whether a domestic relations order[] is a Qualified Domestic Relations Order . . . for purposes of ERISA.” Marker v. Northrop Grumman Space & Missions Sys. Corp. Salaried Pension Plan, No. 04 C 7933, 2006 WL 2873191, at *5 (N.D. Ill. Oct. 4, 2006) (citing Hogan v. Raytheon, Co., 302 F.3d 854, 856 (8th Cir. 2002)); see also Branco v. UFCW-N. Cal. Employers Joint Pension Plan, 279 F.3d 1154, 1158 (9th Cir. 2002); Brown v. Cont'l Airlines, Inc., 647 F.3d 221, 226 (3d Cir. 1999).

         Here, the disagreement lies in whether the DRO contains a provision that conflicts with the Plan. The Trustees of the Plan, as its administrators, have an obligation to act in accordance with the Plan documents. See Kennedy v. Plan Adm'r for DuPont Sav. & Inv. Plan, 555 U.S. 285, 286-87 (2009) (“ERISA provides no exception to the plan administrator's duty to act in accordance with plan documents.”). Thus, the Trustees have an obligation to determine whether the DRO is qualified in accordance with the Plan. The Plaintiff argues that this requires interpretation of the DRO, and the Fund argues that this requires an interpretation of the Plan.

         The provision of the DRO that is at issue states:

If the Alternate Payee's death occurs before the Participant's death, the monthly amount assigned to the Alternate Payee pursuant to Section 7 of this Order shall be paid to Alternate Payee's named beneficiary(ies) or to Alternate Payee's estate if no beneficiary has been named; however, all payments to Alternate Payee's beneficiary(ies) shall cease upon Participant's death if Participant's death occurs after the five year guaranteed payment period.

(See DRO, ECF No. 1-3.) The Court finds that there is no question as to what the DRO requires. The DRO permits the Alternate Payee (the Plaintiff) to name a beneficiary to receive the allotted benefits subsequent to the Plaintiff's death but prior to either the sixtieth monthly payment to Smith or Smith's death, whichever comes later. What is not clear is whether this provision conflicts with the Plan. The parties do not argue that there are any other statutory requirements regarding the DRO that the Court must interpret. Therefore, it is the interpretation of the Plan that is at issue, not the interpretation of the DRO.

         3. Whether the Trustees as Plan Administrators Had Discretionary Authority

         The Court turns to whether the Plan granted discretionary authority to the Trustees so that the Court must review their decision under the arbitrary and capricious standard. “In order to lower the level of judicial review from de novo to arbitrary and capricious, ‘the plan should clearly and unequivocally state that it grants discretionary authority to the administrator.'” Semien, 436 F.3d at 810 (quoting Perugini-Christen v. Homestead Mort. Co., 287 F.3d 624, 626 (7th Cir. 2002)). “[C]onferral of discretion is not to be assumed.” Herzberger v. Standard Ins. Co., 205 F.3d 327, 331 (7th Cir. 2000) “[T]he presumption of plenary review is not rebutted by the ...

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